Perry: Cost recovery rule is 'not a directive' for FERC

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Dive Brief:

Secretary of Energy Rick Perry addressed his agency's recent proposed rule to provide cost recovery for baseload coal and nuclear generators at an event on Friday, saying it is "not a directive" for the Federal Energy Regulatory Commission (FERC), the Washington Examiner reports.

Perry shot back at criticism from energy stakeholders that the proposal would unravel wholesale power markets, reportedly saying that "there is no free market" for electricity. He said he hopes the proposed rulemaking inspires a "conversation" on how to create an "energy foundation that is stable, resilient, and I happen to think coal and nuclear should be a part of that.”

Perry's comments come after FERC Commissioner Robert Powelson criticized the DOE proposal this week, saying he would quit before voting for a rule that destroys wholesale power markets.

Dive Insight:

In the week since the Department of Energy proposed to provide cost recovery for baseload power plants, a broad group of energy interests lined up to oppose it

Earlier this week, natural gas, renewable energy and storage interests decried the rule at a House committee hearing, and 11 industry groups filed a petition with FERC to extend its timeline for review. Only coal and nuclear interests expressed qualified support.

On Wednesday, Powelson added his voice to the chorus, pledging that FERC "will not destroy the marketplace" in a speech before PJM stakeholders.

"I did not sign up to go blow up the markets," he said, echoing warnings from former FERC commissioners early in the week. Fellow Commissioner Cheryl LaFleur later endorsed the comments on Twitter, writing "great message!"

Congressman Pete Olson (R-TX), vice chair of the energy subcommittee at the House Energy and Commerce Committee, seized on those comments after a Thursday hearing. Following critical comments from consumer advocates on the DOE proposal, Olson said he is "concerned" the rule would drive up power prices by "picking winners and losers."

Perry replied to those criticisms on Friday, dismissing concerns over the rule's impacts on the market.

“It’s really important to understand in general terms there is no free market in the energy industry and anyone who stands up and says you are affecting the free market, well, there is no free market,” Perry said, according to the Examiner.

Perry equated his rule with earlier efforts from the Obama administration to spur renewable energy development, saying "they had their thumb on the scale at great detriment to reliable baseload industries that are really important for the future security of this country." The Trump administration on Friday also moved to rescind the Obama-era Clean Power Plan, which aimed to govern carbon emissions from the power sector.

FERC and industry players will have to work fast to respond to the DOE's proposed rulemaking. Earlier this week, the agency set an Oct. 23 deadline for initial industry comments, and FERC plans to file the official rulemaking proposal in the Federal Register next week Tuesday.

DOE asked FERC to act on the proposal within 60 days of filing, and earlier this week, FERC's general counsel said it would take "appropriate action with the timeframe," meaning a new rule could be finalized or formal evaluation extended by the second week of December.